Ark Valley News - Council examines Kechi’s insurance costs

Council examines Kechi’s insurance costs
By David Dinell
Last Updated: April 02, 2015

Insurance is a part of life, and that's no different for city government. And like individual citizens, cities often face increased cost for those premiums. That's the situation this year, as the city of Kechi's insurance went from $56,490 to $59,910, a $3,420 increase.

City officials said the increase could have been more and they worked to hold it down as much as possible, especially in the area of workers compensation, the highest insurance expense.

With that in mind, the Kechi City Council approved a new premium for the next 12 months at its March 26 meeting. The new rates take effect April 1.

They weren't particularly happy about having to pay more, and as Mayor Ed Parker asked: "Is there ever going to be a time when it (insurance) doesn't go up?"

Curtis Zerr, president of Zerr Insurance, the city's new insurance agent, said he and city staff worked hard to hold the premium down.

"We did wrestle with it pretty good," he said. Zerr represents EMC Insurance, or Employers Mutual Company, Kechi's underwriter.

For example, the cost of workers compensation insurance went from $15,676 to $16,539, but it could have been worse, Zerr said.

"We were able to save some money in that area," he said.

Part of the challenge is that it's more difficult for a small city such as Kechi to get breaks on insurance because a few claims can spike the premiums, said Nicole Bailey, finance director and treasurer.

Kechi has only 13 full-time employees and five part-timers. In 2013, it had three workers compensation claims, which resulted in higher cost. Last year, it had no claims and it will need to continue that record to get a future break.

All agreed that cutting down on workers compensation claims was a goal. The city has been working on employee safety issues and will continue to do so, Bailey said.

Council member Deb Jacobs said that she wants to see that effort continue.

"A lot of insurance companies smile on you if you have a safety program," she said.

As the city's insurance agent, Zerr said he's interested in getting it the best deal possible from underwriters.

"If we can be profitable, the insurance company will reward us," Zerr said.

"We need to be proactive to save money. We are going to do what we can to make people more safety conscious," he said.

Some sections of the Kechi's insurance policy did decrease slightly, such as data compromise, employment practices and contractors equipment. Others, such as the property floater, stayed the same.

This was Zerr's first council meeting as the city's agent, and he said he looks forward to a long, positive working relationship.

"I'm proud of this community and I'm proud to be a part of it," he said.

In other action, the council:

•Approved an increase in backflow testing fees from $40 to $100. At issue is a state regulation mandating that the city must ensure that its water supply is protected from contamination. In that regard, the city mandates backflow prevention devices for lawn sprinkler systems, thus preventing cross-contamination. Those devices must be tested by a state-certified operator.

Commercial sprinkler companies have such operators and charge a fee, generally between $35 and $65, for the service. The city also has a licensed operator and has been charging $40 for the service, however, City Administrator Bob Conger said that places it "in direct competition with local sprinkler companies" and recommended sharply increasing the fee so it wouldn't hurt businesses.

Conger also said that the "cheaper" cost comes with a price as the city is actually subsidizing the additional costs the calls take. Bailey agreed.

"If we're making the calls for $40, we're doing them at a loss," Bailey said. The ruling won't affect residents with a private well because those systems are not tied into the city's water system.

•Listened to Dustin Avey, public finance investment banker and managing director with Piper Jaffray & Co. of Overland Park, Kan., introduce himself. Avey is the city's new financial adviser and replaces Mark Detter who resigned as he took the city administrator's position in Andover.

•Tabled an agreement dealing with a change with the city's real estate agent, Dwight Boyce. He is moving from Crown III Realty to the Keller Williams agency. The agreement doesn't change the city's working relationship with Boyce but is necessary for legal reasons. However, Parker objected to the fact that the council didn't have time to examine the situation. Earlier, in a separate comment, he asked that more background material on agenda items be submitted to council members by city staff before meetings.

"We need some time to study it a bit," he said. Conger agreed and said he would be working harder in the future to ensure that the request is honored.

•Went into an executive session for five minutes for a non-elected personnel matter. It promoted utility maintenance worker James Grow from a Level 2 Step 15 classification to a Level 2 Step 16.

All members were at the meeting. The council's next meeting is 7 p.m. April 9 at City Hall.